Are we there yet?

Garmin ($GRMN) posted Q4 and full year earnings this morning before the bell and wow were they impressive. They beat the Street’s EPS consensus by 20 cents and our Estimize by a penny.

Garmin showed nice growth in its Outdoor and Fitness segments…and believe it or not, actually eked out revenue growth for the quarter in its Automotive/Mobile segment, which has been under big time pressure since the advent of the smartphone GPS from the likes of Apple ($AAPL) and Google ($GOOG).

Yesterday on CNBC, @herbgreenburg talked a bit about how Garmin has been able to weather the PND slow-down storm, taking many by surprise (here’s the vid). Though auto PND’s have been GRMN’s bread and butter over the last decade, they have really stepped up their game with nifty new workout gadgets, outdoor instruments and state-of-the-art navigational equipment for boats, planes and helicopters.

Here’s the Q4 YoY numbers:

• Total revenue +9%
• Net income +25%

…by segment revenue:

• Auto/Mobile +4%
• Outdoor +35%
• Fitness +17%
• Marine +16%
• Aviation up slightly

…by region revenue:

• Americas flat
• Euro/Mideast/Africa +28%
• Asia Pac +9%

Full year 2011:

• Total revenue +3%
• Net income -11%

…by segment revenue:

• Auto/Mobile -5%
• Outdoor +14%
• Fitness +24%
• Marine +12%
• Aviation +9%

…by region revenue:

• Americas -7%
• Euro/Mideast/Africa +19%
• Asia Pac +13%

For 2012, Garmin expects EPS to be in the $2.45-2.60 range ($2.41 est.) and revenue of $2.7-2.8 billion ($2.55bil est.).

Dr. Min Kao (CEO) said this:

“Entering 2011, we forecasted $2.5 billion of revenue and $2.50 of EPS. I am pleased to say that we far exceeded those targets through a combination of solid execution by our associates and successful acquisitions that further diversify our company in both products and geographies. The business generated free cash flow of $784 million. We returned $311 million to shareholders through our quarterly dividend and used an additional $54 million to fund acquisitions. We will continue to use both of these strategies to grow long-term shareholder value.”

They also pre-announced a $1.80/share divy. Our bud @DynamicDividend has the lowdown here.

You can catch all the other interesting tidbits that we left out via their IR stream @GarminStock.

2 year chart (Y! Finance)

So it looks like 2011 was a transitional year for Garmin, with Q4 being the icing on the cake. We would have liked to have seen better Q4 growth in the Aviation segment but here’s a little secret: back on Feb. 8, Garmin’s Aviation Director, John Foley, met with House Rep. Tom Petri and others at the Aviation Subcommittee of the House Transportation and Infrastructure Committee hearings.

About a week later Obama signed the new FAA transportation bill into law. It will in part fund the FAA’s future navigation systems upgrade.

Will Garmin be in position to get some of this navi-upgrade work? Remains to be seen, but the odds are probably in their favor.

And speaking of the friendly skies, @howardlindzon had a nice post this morning about the gathering momentum of Garmin’s stock, and how the StockTwits community is gathering steam in the finance world.

sources: Garmin 4th-qtr beats market estimates – Reuters

Garmin Reports Fourth Quarter Results Highlighting EPS Growth and Revenue Growth in All Segments – BusinessWire

Garmin smashes estimates as PND revenue growth returns – Reuters

Obama signs $63B FAA funding bill into law – The Hill

Garmin Pushes Yield Over 4% — For Now – The Dynamic Dividend

Garmin.com

disclosure:  we currently own GRMN and AAPL

$HITK been pretty quiet lately…not much in the news. Probably a good thing.

$RES normally flying under the radar, their stream was abuzz this week as it kissed 52wk lows.

$CEO good news as The Motherland wants to frack shale at home – Forbes

$EZPW caught fire midweek along with $CSH and $FCFS as competitor $AEA gets bought out.

$TEO made lots of pesos last qtr – Reuters ..and why are iPhones so hard to come by? – WSJ

$DO had a good week as the U.S. oil rig count reached record levels – Zacks

$AAPL 500 bucks.

$GRMN very busy making iPad apps, toys for yachts and buying companies. Earnings on tap Wed.

$TRLG struggling to hold the mid-20′s after getting shellacked last week post-earnings.

$TNH fell off a cliff this week despite pretty good Q4 report. Sales up more than 40% – Y! Finance

$AZN dished out a fat divy and fighting back the generics with a new patient program – Y! Finance

$BKE approaching 52 wk highs with earnings in a few weeks. Hopefully not a repeat of TRLG.

$NTES beat the Street with ease in Q4, but investors are wary of future gaming growth – WSB

$RIMM and the incredible shrinking margin. Is a cheaper Playbook better? – Forbes

$LULU new to the WSB20 this month, the yoga queen hit all time highs this week.

$BPI holding its own even as for-profit educators have been the scourge of many. Reports 3/6

$INTC is behind a secret plot to shift mobile power back to the service providers? – Barron’s

$CVX preparing to team up with Saudi Petrochem on a new polymer plant – Bloomberg

$MED using the stairs to get out of the basement since last earnings.  Q4 on tap next month.

disclosure:  we currently own all the above mentioned except AEA, TEO, TNH, LULU and BPI

Hot wasabi! Finally, we got some good news to report on a Chinese stock.

Those who follow us know we’ve experienced the burning sensation of owning certain Chinese names. We’ve taken our lumps over the last couple years as RTO phenoms like $GURE, $CSKI and $TSTC ripped us a new one (CSKI left a particularly nasty mark).

We actually still own GURE and TSTC, but their worth has dwindled down to miniscule proportions within our ‘folio. They’re there more or less now to serve as constant reminders of why you should think very long and hard before dabbling in China, especially with the small crappers…err cappers.

But, getting back to the good news. After the bell yesterday, NetEase ($NTES) reported Q4 and full year numbers that whipped the consensus on top and bottom lines. Their burgeoning gaming division saw strong sales growth as in-house games, along with their exclusive licensing of Activision‘s ($ATVI) World of Warcraft, performed well. Their advertising division kicked arse too.

Gonna have to pull out the trusty ol’ calculator to convert all these renminbis to dollars, but here’s what I gots:

Q4 YoY

• Revenue +28%
• EPS +31%
• Online gaming revs +29%
• Advertising revs +19%

Full year 2011

• Revenue +32%
• EPS +43%
• Online gaming revs +33%
• Advertising revs +26%

NetEase also closed 2011 with $1.9 billion in cash and deposits.

CEO William Ding had this to say:

“In the first half of 2012, we plan to enhance our portfolio of popular games with numerous expansion packs…We also have two new self-developed games in process that are scheduled for beta testing in mid-2012. We continue to evaluate the market and enhance our products and service offerings to meet the demands of a dynamic and competitive market. As the No. 1 free email provider in China, registered email users grew to 450 million as of December 31, 2011, an increase of 4.7% over the third quarter. The number of micro-blogging users grew to 97.6 million users, an increase of 10.3% over the third quarter.”

Amazing that they have more e-mail users than there are people in the U.S.

1 year chart (Y! Finance)

Ranked #13 in the BeanScreen, we started a position in NTES last month at $42.25. Not wanting to get fried again by another Chinese flash-in-the-pan, we were hesitant at first, but eventually felt that NTES had a strong enough track record and reputation to warrant a stab.

In our experience with Chinese stocks, mid to large cap names are the way to go if you wish to nibble. They are much more accountable to shareholders since many of them are owned in part by the government (better not screw the politicians over) and often have a presence outside of the Motherland. In addition to NTES, we also own China Mobile ($CHL) and CNOOC ($CEO).

sources:  NetEase.com Reports Fourth Quarter and Fiscal Year 2011 Unaudited Financial Results – Yahoo! Finance

NetEase Earnings Grow 31%, Beating Street Forecasts – Investors.com

China’s online game mkt hits $6.8 bln – Reuters

NetEase.com

Brewing Wealth

disclosure:  we currently own NTES, CHL, CEO, GURE and TSTC

Feel the burn!

I do. And to think, right before the close today, I was getting all fired up and ready to brag about how True Religion ($TRLG) just scorched the Street with a blow-out quarter and kickass full year. Umm…no.

Truth be known though, we figured there was a good chance TRLG might miss consensus by a bit (was thinking 69 cents on EPS) as the Street seemed overly bullish in our view at 71 cents, but we didn’t think they’d shank it this bad. TRLG reported Q4 EPS of 57 cents (62 cents ex-impairment/forex charges) and guided down for 2012.

So what the hell happened? Is it really all doom and gloom now? Let’s scour the numbers first.

Q4 YoY:

• Net sales +7.7%
• Net income -8.2%
• Operating income -5.8%
• SSS +11%
• US Consumer Direct sales +24%
• US Wholesale sales -20%
• SG&A expenses +19%

Full year 2011:

• Net sales +15%
• Net income +3.4%
• Operating income +6.7%
• SSS +11%
• US Consumer Direct sales +33%
• US Wholesale sales -18%
• SG&A expenses +23%
• Inventory balance +28%
• Retail store count +24%
• Cash+equiv +30%

From the CEO:

“In the fourth quarter we achieved growth in our net sales, good profitability and approximately $23.1 million in net operating cash flow. This wraps up a good year in which our U.S. Consumer Direct segment, our largest segment, increased its sales by 33% and its operating income by 37%. For the full year, same store sales rose 11%, on top of a 10% increase in 2010. Our International segment grew its net sales by 23%…We expect the agreement for retail and wholesale expansion in Hong Kong and China that we signed in the third quarter, coupled with opportunities to strengthen existing international operations, will help increase our long-term penetration outside the U.S.”

For 2012, TRLG expects to earn $1.88-1.95 per share vs $2.37 estimate. That’s a big discrepancy…not what we wanted to hear. They also plan to open 13 new stores in the U.S. and 14 internationally.

2 year chart (Y! Finance)

Ranked 9th in the BeanScreen this month, we’ve owned TRLG for more than two years now. We’ve bought and sold them a few times along the way, but have maintained a core position of about $19.50 per share. Our last purchase was in August 2010 at $18.37.

There’s no getting around the fact that Q4 was a disappointment, but does one quarter make or break a company? It could, but I suspect not in TRLG’s case. We want to see how the next few Q’s play out first.

Full year 2011 was actually decent. As management scales back their Wholesale segment to preserve brand value, some short term pain is to be expected…just didn’t expect this much pain.

For more info on TRLG’s earnings, check out @BrianSozzi and his insightful thoughts here.

sources: True Religion Apparel Announces Fourth Quarter and Full Year 2011 Financial Results and Introduces Full Year 2012 Guidance – Yahoo! Finance

True Religion shares tumble on earnings, outlook – AP

Ugly Jeans, Ugly Quarter for True Religion – The Street

True Religion

disclosure:  we currently own shares in TRLG

Australian for mining.

It wasn’t pretty, but it’s not supposed to be. Mining is a tough, dirty business. It’s not for everyone. And when it comes to investing in it, you better wear a helmet.

Gyrating metal markets, worker strikes, floods, tax-happy politicians – they’re all just part of the game miners (especially the world’s biggest) must play when doing business, and despite missing estimates by a smidgen, BHP Billiton ($BHP) still managed to crank out almost $10 billion over the last six months in net income.

Some 1st half numbers (YoY):

• Total revenue +9.7%
• Net income -5.5%
• Petroleum revs +38%
• Aluminum revs +9.1%
• Base metal revs -26%
• Iron ore revs +30%
• Energy coal revs +22%
• EBITDA +8.3%
• Exploration expense +131%
• Interim divy +20% (fully franked)

Have no clue what “fully franked” means, but it sounds tough.

Looking ahead, management had this to say:

“We expect volatility in commodity markets to persist as the European sovereign debt crisis and general weakness in the manufacturing and construction sectors across key markets are expected to weigh on customer behavior and sentiment. We expect underlying demand growth rates to remain robust, so long as the macroeconomic policy setting of the developing world retains a growth bias.”

Interestingly enough, the U.S. was a strong point for BHP as the manufacturing sector strengthened. Japan was another bright spot due to reconstruction efforts after last year’s tsunami. Europe was weak (no surprise there), and the two big high-growth economies, India and China, saw scaled back levels of activity.

1 year chart (Y! Finance)

Ranked #31 in the BeanScreen, we initiated a position in BHP early last summer at $88, and added to it in late Sept. at $74. By the looks of this latest report, we’ll be holding fast to our investment in BHP. The underlying fundamentals of the company remain solid in our view.

Along with BHP, we also own Brazilian iron ore miner Vale ($VALE) and American coal miner Alliance Resource Partners ($ARLP).

You can review ARLP’s recent earnings highlights here.

sources:  BHP Billiton First-Half Profit Drops 5.5% – Bloomberg

BHP Billiton posts 5.5 percent fall in profit – AP

BHPBilliton.com

disclosure:  we currently own shares in BHP, ARLP and VALE

Intel ($INTC) and Microsoft ($MSFT) have been steadily leading the charge for mega-cap tech names in recent weeks after both reported good earnings.

Garmin ($GRMN) has been on cruise-control as they ride 52 week highs into earnings on 2/22.

1 year chart (Y! Finance)

disclosure:  we currently own shares in GRMN, MSFT and INTC

$HITK gets nod from FDA on a snappy new generic drug for anxiety issues – Yahoo! Finance

$RES getting smacked around with other oil servicers as drilling for dry gas wanes – Investopedia

$CEO wants to triple its current energy output by 2030. That’s large – Reuters

$EZPW sealed the deal on its Mexican acquisition of Crediamigo. Olé! – Y! Finance

$DO took an earnings hit in Q4 as rigs taken offline, but still beat the Street – WallStreetBean

$AAPL leads the charge as wireless gadgets steal PC’s thunder for chip consumption – Forbes

$GRMN has an expensive app for your trusty iPad that is worth every penny – The Street

$TRLG earnings on tap for the denim diva next Thursday as she flirts with all-time highs.

$TNH busted out to all-time highs this week. Five year chart is a thing of beauty.

$AZN reported respectable earnings, but the road ahead could get bumpy as they trim fat – AP

$BKE sales were up, up and up across the board for the month, quarter and year – Y! Finance

$NTES a way to get your foot in the Chinese internet door…thanks to Facebook ($FB)? – CNBC

$VASC “Reported a nice Q4 this week,” said no one to no one. Who are these guys? – Y! Finance

$RIMM the BlackBerry actually showed overall shipment growth in 2011 – Wall Street Journal

$LULU making its BeanScreen debut this month, they’re also a hot topic on The Stream. Namaste’

$BPI get your learn on! They have an official ST account, but I don’t see any tweets. Hmmm.

$INTC what the hell is an Ultrabook? Please tell me – Breakout

$CVX monthly output down in Brazil after getting dissed for some spillage – Bloomberg

$MED shakeup at the top as Michael will replace Michael – Baltimore Business Journal

disclosure: we currently own shares in all the above mentioned except TNH, VASC, LULU and BPI

Diamond Offshore ($DO) reported earnings this morning that smashed the Street’s EPS estimates by about 36 cents (four Q’s in a row now). DO raked in $1.36/share in Q4. We had ‘em pegged at $1.40. Trying to predict earnings in a such an up and down industry can be very tricky though. Rigs can go on or off-line at a moment’s notice it seems these days. Thanks BP.

Anyway, most knew Diamond was likely to have a weak Q4 compared to last year, as they had stated not long ago that a number of rigs would be taken down for routine maintenance as 2011 wound down. Maybe this was to prepare for a super duper 2012? Over a billion bucks worth of new contracts were signed in Q4 (that’s ~11 years in rig work), and backlog now sits at over $8 billion.

So let’s get right to the Q4 YoY stats:

• Revenue -11%
• Net income -22%
• Operating income -35%
• Total dayrates +4%

Full year 2011 earnings and revs were essentially flat over 2010.

Speaking of those newly signed contracts and backlogs, the CEO had this to say:

“The $1.2 billion of revenue backlog we were able to add since the end of the last quarter demonstrates the strong demand in all of our key markets. Our newbuild drillships, the Ocean BlackHawk and Ocean BlackHornet, have long-term contracts beginning in Q4 2013 and Q2 2014. Additionally, given the strong current environment, we think significant opportunity exists for our third newbuild drillship, the Ocean BlackRhino, as well as for deepwater units such as our recently announced Ocean Onyx.”

Positive forward thinking…I like that.

Diamond also declared a sweet special divy of 75 cents to go with its regular div of 12.5 cents, to be dished out on March 1.

2 year chart (Y! Finance)

Ranked #6 in the BeanScreen, we’ve owned some DO for almost 2 years now at a cost basis of about $73. Our last purchase was a couple months ago at a cool $55.50 – trying to bring that basis down…thanks again BP.

On a side note, another driller fave of ours, Atwood Oceanics ($ATW), reported Q1 that missed estimates but showed strong year over growth in revenues and net income.

sources: Diamond Offshore Q4 profit beats Street view – Reuters

Diamond Offshore 4th-qtr profit falls 22 percent – Yahoo! Finance (AP)

Diamond Offshore Drilling Inc. Earnings: Revenue Falls After Two Straight Increases as Profit Drops – Y! Finance (Wall St. Cheat Sheet)

Diamond Offshore Announces Fourth Quarter 2011 Results – Y! Finance (Business Wire)

DiamondOffshore.com

disclosure: we currently own DO and ATW

As always, do your due diligence cuz we ain’t pros! The BeanScreen is just an idea creator for us.

Follow the Consecutive Months Tracker in real-time here.

This month’s returns.

In: LULU, BPI, INTC              Out: QCOR, CHL, MSFT

The 2nd Twenty (21-40)

The Farm System (41-100)

The BeanScreen is based on fundamentals. Each month hundreds of companies are screened and scored on a fundy health index ranging from 0-100. Over time an average score and rank is compiled for a select group of stocks. The higher the score, the stronger a company’s overall fundamentals. Here is the breakdown:

70-100 = very strong

60-69 = strong

40-59 = average

0-39 = weak

Below are the seven categories (with weighting) that contribute to a stock’s WSB score:

• Growth Rates – 25%
• Price Ratios – 18%
• Profit Margins – 15%
• Financial Condition – 15%
• Investment Returns – 15%
• Momentum – 6%
• Management Efficiency – 4%

Within each category are an assortment of parameters that are uploaded into the BeanScreen via Randy Hamerlink’s stock market functions add-in program for Excel. The data is then benchmarked and scored using our custom formula. A few other secondary parameters (2% weighting) are measured as well, such as Insider Ownership and Short Ratios.

The BeanScreen is not a perfect system. It cannot fully detect value traps (working on that!) or fraud. It is strictly an idea generator, a tool in our investing shed. Backward looking by nature, it only determines those companies that have appeared to exhibit healthy fundamentals over the last few months to two years. Our goal is to sift out these stocks and then hunt for potential value plays.